AUS: Roxon to close RTD drinks tax loophole

Australia's tax hike on ready-to-drink alcoholic beverages will be expanded to close a loophole allowing drinks companies to escape payments, the country's government has said ahead of a crucial vote in the Senate.

Health Minister Nicola Roxon said today (25 February) that last year's 70% tax hike on 'RTDs' would be expanded to include sweetened malt-based beverages.

Her announcement came during a fiery debate in Australia's House of Representatives, which ultimately saw last year's tax hike on RTDs approved by members in its second reading.

Roxon's amendment comes after reports that some drinks companies have exposed a loophole in the legislation, allowing them to avoid the tax hike by producing malt-based RTDs.

Diageo's Smirnoff Platinum brand, a flavoured malt drink, is one of those under scrutiny. Diageo launched Smirnoff Platinum in Australia in January, although it has been available in the US for around a decade.

The RTD tax rise, which ministers say is helping to tackle binge drinking, was passed by a narrow 75 votes to 64 today. It will now move to a vote in the Senate, where it could yet be brought down by opponents.

Roxon said that RTD sales have fallen by 35% since the tax hike was introduced early last summer. She said that this was clear evidence that the policy is having a beneficial effect on young peoples' drinking habits.

"This measure is working. It is backed by research, it is backed by health experts and it is backed by the evidence. It will enable us to make significant investments in preventing and tackling alcohol abuse."  

The Opposition has accused Australia's government of attempting a "tax grab" by targeting RTDs under the guise of improving public health.

Opposition health spokesperson Peter Dutton today called for the tax to be abandoned. He also cited a recent Galaxy poll which found that nearly 80 per cent of respondents believe that the tax increase is ineffective at addressing binge drinking.

Should the Senate vote down the tax, however, it looks unlikely that any money will be redistributed to the industry. Dutton said he would support using the money already received for health and awareness projects related to alcohol use.